Putting more money in hands of poor only solution in short run: Abhijit Banerjee
Nobel laureate Abhijit Banerjee recently said the only solution to overcome economic pain in the short run is to give more money in the hands of the poor. Banerjee reiterated that the money that is being handed out to the poor in the wake of the Covid-induced economic crisis should be more.
Banerjee’s comments came during an online panel discussion hosted by the National Council of Applied Economic Research (NCAER). The Nobel laureate also called for a complete revamp of the social welfare system in the long run.
However, Abhijit Banerjee made it clear that the only way to reduce economic distress in the short run is by giving more money to poorer sections of society.
"In the short run, I think the government's basic general thinking is use whatever instruments you have to give people some money. That's probably a good instinct. I think the amounts are wrong, it should be bigger, it's going to be a longer and more painful recovery.”
He went on to added that the idea to redesign the social welfare system in the middle of the pandemic is a “bad idea”.
Banerjee said in the short run, the government should also try to “loosen the purse strings” instead of trying to invest new instruments.
He also added that schemes such as the MGNREGA are not short-term emergency response tools and that the government needs to rethink the entire welfare system.
“I think in that context we also need to take into account the urbanisation of poverty and how we find something commensurate for the urban population," Banerjee said.